How will the Companies Act 2014 affect you?

You may be aware that the Companies Act 2014 commenced on 1st June 2015. This new legislation impact on the corporate structure of companies.

The 5 keys changes under the Companies Act are:-

Companies must choose a new company type of either a Company Limited by Shares (LTD) or Designated Activity Company (DAC)

LTD companies may have only one director but must have a separate company secretary

Loans to and from a director or connected person must be approved in writing or are deemed to be repayable on demand

Audit Exemption is now available to small groups, Companies Limited by Guarantee and certain Unlimited Companies

There are a number of changes to company financial statements and disclosures

As a Private Limited Company, a company will have a choice of what new company type it wishes to operate as. Most companies will become an LTD company as this will be the simplified compliance company with no restriction on the activities that the company can carry out. Certain companies will have to retain their objects clause and become a DAC.

What do you need to do now?

We recommend that the Board of any Private Limited Company convert into either an LTD / DAC and adopt a new constitution as soon as possible. You may wait until 1st December 2016 and be automatically converted into an LTD company. However in that instance the company will have to wait until 1st December 2016 to become a single director company.